Existing Standards
STANDARD 5.2 – Chattels Purchased with
Residential Income Property
If the purchase and sale agreement for residential
income property includes a transfer of personal
property, a lawyer should search for encumbrances
under the Personal Property Security Act1 for either
or both the seller’s name and for serial numbered
goods, as the case requires, and report upon the
results of such search.
A lawyer must consider the possibility of other
security instruments, statutory liens, or deemed
trusts affecting the personal property including the
requirement for a clearance certificate under the
Revenue Act Regulations.2 When reporting the
results of such searches, the lawyer should heed
the caution against certifying title to personal
property.3
A lawyer should advise the buyer of personal
property other than of nominal value that the buyer
may be obliged to remit Harmonized Sales Tax on
the personal property.
2.
3.
A lawyer who represents a buyer of real property in
a transaction that includes the purchase and sale of
personal property must consider whether to search
the Personal Property Registration System
(“P.P.R.S.”) for encumbrances and judgments which
attach to the personal property. A lawyer who
represents a lender where the collateral includes
personal property must search the P.P.R.S. for
encumbrances and judgments which attach to the
personal property. 1
A lawyer who considers whether to conduct a
P.P.R.S. search may consider the exemptions for
consumer goods having a value of $1,000.00 or
less. 2
A lawyer who conducts a P.P.R.S. search must
search the serial number if the personal property
includes serial numbered goods as defined, 3 or in
all other cases search the name of the “debtor.” 4
When reporting the results of such searches, the
lawyer should heed the caution against certifying
title to personal property. 5
A lawyer must consider the possibility of other
security instruments, statutory liens, or deemed
trusts affecting the personal property. 6
Notes:
1.
Proposed Standard
STANDARD 5.2 – Personal Property
Personal Property Security Act, S.N.S.
1995-96, c. 13
Revenue Act Regulations, N.S. Reg.
63/96, s. 39
R. Wright, “Certifying the Uncertifiable Chattels” (1993) 5 The Claims Wise
Bulletin, Claims Wise No. 29 at
A lawyer who represents a lender where the
collateral includes personal property must consider
registering a notice in the land registry to protect
perfection of the security interest in the event the
personal property becomes a fixture. 7
Notes:
STANDARD 5.3 – Personal Property Security Act
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1 Personal
Property Security Act, S.N.S. 1995-96, c.
13.
2 Personal Property Security Act, S.N.S. 1995-96, c.
Rationale
Rationale for Proposed Revision of STANDARDS
5.2 and 5.3 - Chattels Purchased with Residential
Income Property and Personal Property Security
Act
The committee decided to update the standards on
chattels purchased with real estate (standard 5.2)
and the Personal Property Security Act (standard
5.3). The existing two standards both deal with the
same subject matter – personal property. The
P.P.S.A. standard simply deals with chattels which
may become fixtures, whereas the P.P.S.A. should
be considered whenever dealing with personal
property in a real estate transaction. For these
reasons the committee determined that the two
standards should be combined into a single
standard on personal property.
References to searches and registrations in the
P.P.R.S. and L.R.O. have been made more
educational, and some orientation is given in a note
on miscellaneous charges.
The committee has also removed a reference to
bulk sales legislation which has been inapplicable
since the Provincial Sales Tax was harmonized into
the H.S.T.
A direction that lawyers should advise their buyer
clients that personal property sold in a real estate
transaction (such as appliances) may require the
buyer to remit H.S.T. on those items has been
removed because the committee can find no
authority for it. The legislation requires the seller,
rather than the buyer, to collect and remit H.S.T. on
personal property, not the buyer. A duty to advise
the seller in the same regard is beyond the normal
transaction contemplated in the standards because
the seller would have to be selling the personal
property in the ordinary course of business.
When dealing with personal property that may
become a fixture, a lawyer should consider the
effect of the fixture provisions under the Personal
Property Security Act1 which may require
registration of notices under the Act and the
1.
2.
Registry Act;2 or
Land Registration Act,3
whichever applies.
Notes:
1.
2.
3.
Personal Property Security Act, S.N.S.
1995-96, c. 13, ss. 3(1) and 50
Registry Act, R.S.N.S. 1989, c. 392, ss.
1A(1) and 18A
Land Registration Act, S.N.S. 2001, c. 6, s.
59
13, s.31 & Creditors Relief Act, R.S.N.S. 1989,
c.112, s.2B(6).
3 See Personal Property Security Act General
Regulations, N.S. Reg. 129/97 for the definition of
“serial numbered goods.”
4 Personal Property Security Act, S.N.S. 1995-96, c.
13, s.2(1)(m) defines “debtor” to include owners,
obligors and transferees in various circumstances.
Therefore the buyer and seller should both be
searched in purchase and sale transactions, and the
owner should be searched in refinancing
transactions.
5 R. Wright, “Certifying the Uncertifiable - Chattels”
(1993) 5 The Claims Wise Bulletin, Claims Wise No.
29 at 2.
6 These may arise, for example, under the Income
Tax Act, R.S.C. 1985, c.1 (5th Supp.), Excise Tax
Act, R.S.C. 1985, c.E-15, the Bank Act, S.C. 1991,
c.46, s.427, municipal liens and liens in foreign
jurisdictions. While these will not apply to personal
property in most residential transactions, the lawyer
should have regard to these kinds of charges when
considering transactions involving personal
property.
7 Personal Property Security Act, S.N.S. 1995-96, c.
13, ss. 37 and 50; Registry Act,
R.S.N.S. 1989, c. 392, ss. 1A(1) and 18A; Land
Registration Act, S.N.S. 2001, c. 6, s. 59.
Practice Notes:
The potential for personal property to become a
fixture will often affect security interests in mobile
homes, modular homes, furnaces and water
heaters, for example. Typical lenders’ instructions
on mobile home and modular home transactions
vary, and often include express instructions not to
register the security in the land registry. It is
recommended that lawyers review the lenders’
instructions in each case to determine the extent of
their obligations.
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